Jim needs $1,000 to buy a new flat-screen TV. Since he has only $7, he borrows the remanining balance from his sister Mary. The loan will be repaid in 3 annual installments at an interest rate of 10%, compounded annually. The formula for calculating the monthly payment P is P = (L x C x r) / (C andndash; 1) where L = amount of the loan, r = annual interest rate, and C = compounding factor = (1 + r)N where N = number of annual payments. How much does Jim have to pay Mary at the end of each of the next 3 years (rounded to the nearest penny)?a)$357.67b)$375.85c)$387.40d)$399.30e)$433.33Correct answer is option 'D'. Can you explain this answer?

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Jim needs $1,000 to buy a new flat-screen TV. Since he has only $7, he borrows the remanining balance from his sister Mary. The loan will be repaid in 3 annual installments at an interest rate of 10%, compounded annually. The formula for calculating the monthly payment P is P = (L x C x r) / (C – 1) where L = amount of the loan, r = annual interest rate, and C = compounding factor = (1 + r)N where N = number of annual payments. How much does Jim have to pay Mary at the end of each of the next 3 years (rounded to the nearest penny)?

a)
$357.67
b)
$375.85
c)
$387.40
d)
$399.30
e)
$433.33

Correct answer is option 'D'. Can you explain this answer?

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Jim needs $1,000 to buy a new flat-screen TV. Since he has only $7, he...

Although this problem appears to be complicated, it is fairly straightforward; since we are given a formula, we can simply plug in the values that we need then calculate. First, let us assign a value to each of the variables in the formula:
L = amount of the loan = 1000 – 7 = 993
r = annual interest rate = 10% = 0.1
C = compounding factor = (1 + r)^N = (1.1)³= (1.1)(1.1)(1.1) = 1.21(1.1) = 1.331
Hence P = (993 x 1.331 x 0.1) / (1.331 – 1) = (993 x 1.331 x 0.1) / 0.331 = (993/.331) x 1.331 x 0.1.
Note that 993 is an integral multiple of 0.331 and 993/0.331 = 993000/331 = 3000.
Hence P = (993/0.331) x 1.331 x 0.1 = 3000 x 1.331 x 0.1 = 399.30
The correct answer is D.

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Jim needs $1,000 to buy a new flat-screen TV. Since he has only $7, he...

X (1+r)^n - 1), where L is the loan amount, C is the annuity factor, r is the interest rate per period, and n is the total number of periods.

First, we need to calculate the loan amount that Jim received from Mary:

Loan amount = $1,000 - $7 = $993

Next, we need to calculate the annuity factor C:

C = (1 - (1/(1+r)^n)) / r

Since Jim will be making 3 annual payments, n = 3.

C = (1 - (1/(1+0.1)^3)) / 0.1

C = 2.48685

Now we can calculate the monthly payment P:

P = (L x C x r) / (C x (1+r)^n - 1)

P = ($993 x 2.48685 x 0.1) / (2.48685 x (1+0.1)^3 - 1)

P = $364.71

Therefore, Jim will need to make monthly payments of $364.71 to repay the loan from Mary, with an interest rate of 10% compounded annually.

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Jim needs $1,000 to buy a new flat-screen TV. Since he has only $7, he borrows the remanining balance from his sister Mary. The loan will be repaid in 3 annual installments at an interest rate of 10%, compounded annually. The formula for calculating the monthly payment P is P = (L x C x r) / (C – 1) where L = amount of the loan, r = annual interest rate, and C = compounding factor = (1 + r)N where N = number of annual payments. How much does Jim have to pay Mary at the end of each of the next 3 years (rounded to the nearest penny)?a)$357.67b)$375.85c)$387.40d)$399.30e)$433.33Correct answer is option 'D'. Can you explain this answer? for GMAT 2025 is part of GMAT preparation. The Question and answers have been prepared according to the GMAT exam syllabus. Information about Jim needs $1,000 to buy a new flat-screen TV. Since he has only $7, he borrows the remanining balance from his sister Mary. The loan will be repaid in 3 annual installments at an interest rate of 10%, compounded annually. The formula for calculating the monthly payment P is P = (L x C x r) / (C – 1) where L = amount of the loan, r = annual interest rate, and C = compounding factor = (1 + r)N where N = number of annual payments. How much does Jim have to pay Mary at the end of each of the next 3 years (rounded to the nearest penny)?a)$357.67b)$375.85c)$387.40d)$399.30e)$433.33Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for GMAT 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Jim needs $1,000 to buy a new flat-screen TV. Since he has only $7, he borrows the remanining balance from his sister Mary. The loan will be repaid in 3 annual installments at an interest rate of 10%, compounded annually. The formula for calculating the monthly payment P is P = (L x C x r) / (C – 1) where L = amount of the loan, r = annual interest rate, and C = compounding factor = (1 + r)N where N = number of annual payments. How much does Jim have to pay Mary at the end of each of the next 3 years (rounded to the nearest penny)?a)$357.67b)$375.85c)$387.40d)$399.30e)$433.33Correct answer is option 'D'. Can you explain this answer?.

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